Comcast-Time Warner Cable merger faces DOJ skepticism

Justice Department antitrust officials, who were to meet with Comcast Corp. representatives Wednesday to air their concerns about the proposed tie-up with Time Warner Cable Inc., aren’t likely to entertain promises that the merged company would change its behavior to win approval.

The leadership at the antitrust division would rather see the No. 1 U.S. cable company sell assets to keep the market competitive or will file a lawsuit to block a deal that hurts consumers, according to people familiar with the officials’ thinking. This view departs from the U.S. antitrust division’s position in a 2011 accord that allowed Comcast to agree to a string of so-called behavioral remedies to buy NBC Universal.

Now, antitrust lawyers reviewing the proposed $45.2 billion deal to buy Time Warner Cable are looking at whether Comcast complied with terms of the NBC Universal agreement. In particular, the officials are looking at whether Comcast honored a promise not to interfere with management of online video service Hulu, people familiar with the matter have said. Hulu is one-third owned by the cable company.

As Comcast executives and Justice Department officials meet, a day after a group of U.S. senators asked the department to block the merger, saying it would harm consumers, the question is: What it will take for Comcast to secure approval?

Premium content for only $0.99

With this meeting, the review process enters a new phase: a dance where each side seeks to bolster its negotiating position to get the best deal. The Justice Department has filed antitrust lawsuits that ultimately were resolved with settlements, including Anheuser-Busch InBev NV’s purchase of Grupo Modelo SAB and American Airlines Group Inc.’s merger with US Airways in 2013.

Comcast and Time Warner Cable, who have already agreed to abide by the conditions set out for the purchase of NBC Universal, planned to listen to lawyers from the department’s antitrust division, and wouldn’t offer concessions aimed at getting the deal approved, people familiar with the matter said. They wanted to hear the official concerns before putting offers on the table, said one of the people, who asked not to be identified because the matter is private.

Sena Fitzmaurice, a spokeswoman for Comcast, and Bobby Amirshahi, with New York-based Time Warner Cable, declined to comment on the meeting. Peter Carr, a Justice Department spokesman, also declined to comment.

A rejection would be a blow to Comcast, which has sought to expand in major U.S. cities where Time Warner Cable is dominant, including New York and Los Angeles, as well as Charlotte, where it is the dominant cable provider.